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Five years after buying Lucasfilm, The Force is strong in Disney

A clock countdowns the minutes left before the "Force Friday" event for the release of new "Star Wars: The Last Jedi" products outside the Walt Disney Co. store in New York on Aug. 31, 2017. Bloomberg photo by Jeenah Moon.

The lobby of Lucasfilm Ltd.'s headquarters at San Francisco's Presidio is tastefully decorated with Craftsman-style lamps and leather chairs. There's a statue of special effects pioneer Willis O'Brien posing with King Kong in the back, and a full-sized R2-D2 up front.

Mickey Mouse is nowhere to be found.

In the five years since Walt Disney Co. purchased Lucasfilm from founder George Lucas for $4.1 billion, the world's largest entertainment company has followed a familiar script. As with earlier acquisitions of digital pioneer Pixar and cable sports giant ESPN, Lucasfilm has been allowed to retain its iconoclastic character while benefiting from the new owner's largesse.

After some fallow years near the end of Lucas' reign, Lucasfilm is now buried under a blizzard of projects. These include two Star Wars Lands under construction at theme parks in California and Florida; a Star Wars TV show for Disney's new subscription television service launching in 2019, and, of course, the movies, including "Star Wars: The Last Jedi," which will open Dec. 15. Those films, which have reinvigorated the franchise and brought in billions of dollars, succeeded under the watch of Lucasfilm's boss, Kathleen Kennedy.

The ship won't drop out of light speed any time soon. Disney Chief Executive Officer Bob Iger announced Nov. 9 that the company was making a fourth trilogy of the Star Wars saga. Add those three to the four films already in the works, and fans can count on seeing big screen intergalactic warfare well into the next decade.

Vicki Dobbs Beck, head of a new Lucasfilm division that's tapping virtual reality to tell Star Wars stories, has been with the studio for 25 of the past 29 years. She said that, with all the projects currently underway, this has been "the pinnacle of my time with Lucasfilm."

Lucas, 73, laid the groundwork for this renaissance. In 2012, he recruited Kennedy, a producer, to help him run the company and start a new generation of Star Wars films. Four months later, he announced the sale to Disney.

Kennedy, 64, was no stranger. A longtime lieutenant to director (and Lucas friend) Steven Spielberg, she worked with the special effects wizards at Lucasfilm on many of Spielberg's films. A picture on the wall of Lucasfilm's headquarters captures a visit she made to the company decades earlier, when Spielberg was directing the 1982 blockbuster "E.T. the Extra-Terrestrial."

Lucas and Kennedy are similar in many ways. Like Lucas, she is a native of rural California, hailing from Redding, north of Sacramento. Also like him, she's usually no fan of the spotlight. Despite working on some of the most famous movies ever made, Kennedy has tried to keep a low profile.

"There's nothing I like more than to have one of our movies run, and then I go the ladies' room and listen to everyone talk about it," she told Vanity Fair last year.

At the company, her purview involves much more than Star Wars. The Lucasfilm empire includes Industrial Light & Magic, a pioneer in movie special effects, and Skywalker Sound, which produces sound effects and handles editing for as many as 100 films a year. Many Lucasfilm traditions have continued under Kennedy, such as a speaker series featuring visiting movie makers and other entertainment talents who give hour-long presentations to employees. Recent guests have included actor Tom Hanks, director Martin Scorsese and producer Megan Ellison, founder of Annapurna Pictures.

Now in her fifth year as head of the studio, Kennedy has begun to emerge from the shadows. At an October event sponsored by Elle magazine, she called on studios, unions and talent agencies to convene a commission to develop protections against sexual harassment in the entertainment industry. "We must make the film industry an exemplar in this regard, a model for self-regulation that other businesses can emulate," she said.

Kennedy didn't respond to a request for comment. A spokeswoman for Lucas said he wasn't giving interviews.

The San Francisco office of Lucasfilm resembles a museum to pop culture, a culture that owes a lot to movies Lucas's team helped create over the years. Artifacts include the Holy Grail from "Indiana Jones and the Last Crusade," a model of the DeLorean from "Back to the Future," the house in "Lemony Snicket's A Series of Unfortunate Events" and even a Tyrannosaurus Rex from "Jurassic Park." (Despite selling the company, Lucas held onto the pricey real estate underneath the company's offices, including his 5,000-acre Skywalker ranch north of San Francisco, where Skywalker Sound is based.)

The transition to Disney control wasn't without casualties, though. One division that was axed was LucasArts, a maker of video games. It was scrapped in favor of a licensing strategy in which Disney charges game makers who want to use characters in Lucasfilm properties. Some mobile game development is still done in-house, however.

Disney has put its mark on the business in other ways. Industrial Light & Magic has expanded its offices in Singapore and Vancouver and opened one in London, responding to industry globalization and the increasing availability of production tax credits. For her part, Kennedy sought to reorganize a top-down structure when it came to the creative side. She formed an 11-member Lucasfilm story group to develop projects consistent with the Star Wars character library and mythology. Before her arrival, the creative process existed inside the head of exactly one person.

"It was George," said Diana Williams, a member of the group. "George was story."

The first film of the series, "Star Wars," was released 40 years ago. With 16 years between the first and second trilogies, and an additional decade between the second and third trilogies, fans found a lot of room to build their own worlds. Kennedy, as part of her creative initiative, was having none of it. She declared the characters and stories from non-film Star Wars projects, such as novels and comic books by independent authors, as non-canon. That rankled some longtime fans and former business partners.

"I don't quite see the point of repudiating the Expanded Universe," said Lou Aronica, a former executive at Bantam Books, which published Star Wars novels. "Those stories-especially the original Tim Zahn trilogy-kept fans committed to Star Wars during the long hiatus between films."

Ironically, if Disney were to acquire 21st Century Fox Inc., a potential deal currently under discussion, it would unite Lucasfilm with the studio that released the first six Star Wars films, giving Disney complete control of Lucas' legacy.

In her five years running Lucasfilm, Kennedy has sought to tap consumer markets previously ignored by the company. She created ILMxLab, a unit devoted to virtual reality. Its work is evident in a new business venture with Void, a Utah-based entertainment company. At three malls in Anaheim, California, Orlando and London, Void is opening 30-minute virtual reality experiences. For $30, guests put on goggles and computer backpacks and walk through a virtual Star Wars story, blasting stormtroopers, feeling the heat on the molten planet of Mustafar and even smelling the giant lava monsters.

It could be the start of something big, according to Cliff Plumer, Void's chief executive. "Shopping malls, theater chains, airports, cruise ships, they're all looking for attractions," he said.

Lucasfilm's licensing business has also sought to broaden the base of customers for Star Wars products-taking a brand traditionally known for boys and widening it to include apparel, jewelry and high-end electronics aimed at girls and adults.

"One of our top priorities within our segment is what we call audience expansion," Jimmy Pitaro, the executive who runs Disney's consumer products business, said in a September interview.

Toys, malls and jewelry aside, Kennedy's eye has remained fixed on the core business, where she's had the most impact. The two Star Wars films released so far by Disney have grossed more than $3 billion. Along the way, Kennedy has made personnel decisions that triggered mild online panic, with fans worrying the films would suffer. For the first Disney installment, "The Force Awakens," in 2015, writer Michael Arndt was hired and then eased out. More recently, no fewer than three directors were let go before Ron Howard stepped in to helm a planned stand-alone film telling the origin story of Star Wars character Han Solo. It's scheduled for release on May 25. ("The Force Awakens," by the way, earned very positive reviews.)

"The Last Jedi," with its return of the central character from Star Wars lore, Luke Skywalker, looks to continue Lucasfilm's winning streak, with projections approaching $200 million in its domestic opening weekend alone. The first trailer, released in October, went crazy on YouTube. With what appears to be a passing of the torch to new heroine Rey from now-elder Jedi Knight Skywalker, as played by Mark Hamill, and the obligatory new, cute creatures called Porgs, the film seems to have something for Star Wars fans of all ages and species.

Kennedy's presence, as both an experienced movie-maker and Lucas' hand-picked successor, has given the company and its employees a sense of continuity, said Brian Jay Jones, author of "George Lucas: A Life." But even with five years in, the man who built the legendary tale and the company behind it looms large.